What Is Word-of-Mouth Marketing? Definition and Strategy.

Tell all your friends.

Written by Hal Koss
What Is Word-of-Mouth Marketing? Definition and Strategy.
Image: Shutterstock
UPDATED BY
Hal Koss | Apr 13, 2023

Word-of-mouth marketing refers to the free advertising a company receives when consumers organically talk about its product or service with other consumers.

Companies can encourage word-of-mouth marketing by exceeding customer expectations, facilitating conversations between consumers or doing something buzzworthy or exclusive that leads to publicity.

What Is Word-of-Mouth Marketing?

Word-of-mouth marketing is the organic buzz that happens when companies encourage or influence consumers to freely discuss its product or service with their friends, family members or coworkers.

Simply put, word-of-mouth marketing is when companies make something worth talking about and then make it easy for consumers to talk about it with each other.

Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions, according to a 2010 article published by McKinsey. So if companies want to influence what people buy, they need to make word-of-mouth marketing part of their strategy.

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Benefits of Word-of-Mouth Marketing

Word-of-mouth marketing is more effective than traditional marketing (which includes commercials, billboards and radio spots), according to Jonah Berger, a marketing professor at the Wharton School at the University of Pennsylvania. In his book Contagious: Why Things Catch On, he gives two reasons why.

 

Word-of-Mouth Marketing Is Persuasive

Word-of-mouth marketing is more persuasive than advertisements because consumers trust their friends more than traditional media.

According to Nielsen’s 2021 Trust in Advertising Study, 88 percent of respondents said they trust recommendations from people they know more than any other marketing channel.

People are more easily swayed by their neighbor’s review than they are commercials. They are more receptive to the opinions of barbers, classmates and cousins than the paid endorsements of celebrities or the slick production of television commercials.

Word-of-mouth marketing hurdles over the skepticism consumers have toward traditional advertising, which makes it much more powerful and persuasive.

 

Word-of-Mouth Marketing Is Targeted

Word-of-mouth marketing is more effective than traditional marketing because it’s more targeted. It’s better at reaching the right people with the right message at the right time.

Super Bowl commercials may reach tens of millions of viewers, but the products or services they promote may not be relevant to the majority of people watching. When people share through word of mouth, though, they’re doing so because they think the other person might actually be interested. Parents only recommend car seats to other parents, not to everyone they know.

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Types of Word-of-Mouth Marketing

Viral Marketing

Viral marketing involves creating content or stunts that you hope resonates with culture. You can’t plan for virality though. It’s like catching lightning in a bottle — “an occasional outcome that happens if you hit the lottery,” Virginia Miracle, chief customer officer at Upland Software, told Built In.

“You can actually make a plan for word-of-mouth marketing,” Miracle added. “You can plan that you’re going to bring an experience to 500 important users of your platform, and you’re going to invite them to share, and you’re thinking about their motivations.”

While virality is not a guaranteed outcome of a word-of-mouth marketing campaign, it’s often the sign of a successful one.

 

Ambassador Marketing

Ambassador marketing uses actual customers of the brand — not celebrities or paid influencers — to drive authentic buzz. 

When Spike Jones, general manager, strategic services at Khoros, was a word-of-mouth marketer, he and his team “looked for people who were very passionate” and then would “shine a light on them and say, ‘Look at this person and how awesome they are,’” Jones told Built In. “Because they bring the authenticity.”

“It’s not the Kim Kardashians of the world,” Jones added. “It’s the Phils of the world.”

 

Referral Marketing

Referral marketing is one way companies try word-of-mouth marketing. Referral marketing hinges on an incentivization mechanism — the business offers the customer a discount if they refer a friend and that friend signs up or makes a purchase. In its truest form, though, word-of-mouth marketing focuses on the intrinsic motivation of consumers to spread the word.

“Done correctly, good word-of-mouth marketing means you will never have to ask for referrals. They will simply be given to you,” Ted Wright says in Fizz: Harness the Power of Word of Mouth Marketing to Drive Brand Growth. “Remember, influencers don’t need to be reminded to influence ... it’s what they do.”

 

User-Generated Content

User-generated content (UGC) refers to the social media posts or online reviews people make about a company’s products or services. Companies may repurpose these creative assets on their own social or digital channels as a way to showcase positive word of mouth. Additionally, companies often encourage users to post about them through hashtags, contests or simply by delivering post-worthy experiences.

 

Earned Media or Publicity

Earned media, or publicity, is a type of word-of-mouth marketing that involves the unpaid press coverage or media attention a company gets.

Companies can receive earned media by doing pressworthy stunts or pitching stories to journalists.

More on Word-of-Mouth MarketingHow to Get Other People to Sell Your Product for You

 

Word-of-Mouth Marketing Strategies

Common thinking is that word of mouth travels like water, flowing down from brands’ marketing departments to the media to the cultural tastemakers to the general public.

“But real networks are not linear or predictable,” writes Emmanuel Rosen in his seminal book The Anatomy of Buzz. “If I were forced to use a water metaphor, I would say that buzz is more like underground water. It may trickle any which way: down, sideways, or even up.”

For Rosen, there are two things companies can do to successfully generate word of mouth:

  • Have a buzzworthy idea. The product or service they’re selling needs to be talkable, interesting, delightful, outrageous. People need to actually love it, or they won’t be motivated to talk about it. In short, it needs to be contagious.
  • Do things that accelerate natural contagion. Put simply, make the word spread faster.

In the book Word of Mouth Marketing, Andy Sernovitz outlines a five-step plan of action brands can use to stimulate the spread of word of mouth:

 

1. Locate the Talkers and Tastemakers

Find people — such as customers, fans, bloggers and influencers — who will talk about you.

 

2. Give Them Something to Talk About

Give these people a reason to talk about you. Give them a special offer, send them a new product or company swag, let them test out a yet-to-be-released feature. Anything to get a conversation going.

 

3. Use Tools to Help Spread the Message

Leverage technology to help the message spread. This includes referral forms, blogs, forums and coupons.

 

4. Take Part in the Conversation

Join the conversation. Reply to people’s social media comments and engage people in discussions, wherever they take place.

 

5. Track Everything

Monitor what people are saying about you. Set up alerts, read blogs relevant to your category and listen to social media.

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Word-of-Mouth Marketing Examples

These classic word-of-mouth marketing examples highlight the various strategies and tactics companies use to spread the word and generate buzz around their products and services.

 

PBR’s Artist-Friendly Initiatives

In the early 2000s, when sales for the American beer brand Pabst Blue Ribbon (PBR) had been in decline for more than two decades, the company hired Fizz, a marketing firm, to turn things around.

In his book Fizz, Wright describes how he and PBR’s brand manager discovered that, despite overall declines, sales had increased in a handful of cities, including Portland and Pittsburgh. So they traveled to interview PBR drinkers from these cities to see what was going on.

Turns out, many of the PBR drinkers they encountered were what they called hipsters — skinny-jean-wearing, fixed-gear-bike-riding, tattooed creative types. They liked PBR because it was affordable, unpretentious and authentic.

“The program worked because we gave influential people a great story to share.” — Ted Wright

So Fizz and PBR decided to forgo traditional advertising efforts — nothing says inauthentic like a glitzy TV commercial — and instead went to art gallery openings, messenger bike races and skating parties. In these spaces, unassuming PBR reps chatted with folks about their passions and art initiatives, occasionally handing out branded swag and a six pack.

“The program worked because we gave influential people a great story to share,” Wright wrote, “the story of an honest, unpretentious beer brand that genuinely supports individualism and creativity.”

By 2006, PBR had a combined annual growth of 55 percent. And today, PBR continues to support artists across the United States by commissioning murals and opening galleries.

Recommended ReadingHow Brands Wield the Power of Storytelling Marketing

 

Fiskars’ Brand Ambassador Program

In 2006, Fiskars, the company that makes gardening tools and crafting supplies, was losing market share within the craft community. To change that, it tapped creative agency Brains on Fire to build an ambassador program.

Brains on Fire scoured internet forums and blogs, interviewing hundreds of people, before eventually recruiting four scrapbooking influencers to serve as Fiskars brand ambassadors. They were dubbed the Fiskateers.

The Fiskateers were tasked with running a scrapbooking blog, where they would document their crafting experiences. Sometimes they’d connect with other scrapbookers at offline events too, such as trade shows and crafting classes held at local retail stores.

And they were empowered to invite other passionate scrapbookers into the Fiskateer community, where they’d share tips and tricks and discuss their projects. Soon, the program ballooned into thousands of Fiskateers.

Fiskars’ retail sales and online brand mentions increased. It became a well-respected brand within the craft community. And the company leveraged the Fiskateers as a way to gather product insights, which they were able to fold back into their product development and marketing strategies.

 

Jeep’s Jamborees

Several times a year, Jeep invites Jeep owners to participate in off-roading expeditions called Jeep Jamborees. These events are part of a tradition that dates back to 1953, in which participants gather in their decked-out SUVs and voyage across rugged terrain for a few days.

In The Anatomy of Buzz, Rosen describes what makes the Jamborees so effective for word of mouth: “For two days participants eat, drink, sleep, dream, and think Jeep. When they get back to the office on Monday, Jeep is pretty much the only thing they can talk about.”

“A Jamboree makes for good cocktail talk.” — Ed Brust

As Ed Brust, a car executive, told Brandweek: “A Jamboree makes for good cocktail talk.”

Hardly anyone would bother telling a friend or family member about a cool Jeep commercial or billboard they saw. But a weekend off-roading through the Ozarks in your 4x4 with fellow Jeep enthusiasts? You’re going to at least post about it on Instagram, or mention it to a coworker in the break room.

 

ALS Association’s Ice Bucket Challenge

In 2014, the ALS Association created the Ice Bucket Challenge, inviting people to film themselves pouring a bucket of ice water over their heads and post it to social media, where they would also tag friends and family to continue the challenge. The idea, meant to spread awareness about amyotrophic lateral sclerosis and the necessity of continued research, quickly went viral.

RTI International, an independent research organization, concluded that the Ice Bucket Challenge enabled the ALS Association to increase its yearly funding by 187 percent.

“Five years after the Ice Bucket Challenge soaked the world, the pace of discovery has increased tremendously,” Calaneet Balas, president and CEO of the ALS Association, said in a press release, “bringing ALS researchers closer than they have ever been to real breakthroughs in diagnosing, treating, and eventually curing this disease.”

 

Superhuman’s FOMO-Inducing Email Service

Superhuman is a tech startup whose email app is designed to give users a fast inbox experience. The product is aimed at so-called email power users, people who receive and respond to hundreds of emails each day.

Superhuman has acquired thousands of paying customers through word of mouth, not through traditional advertising or an enterprise sales team.

How? For starters, it’s an invite-only app, and many of its first users were decision-makers and high-powered executives. Superhuman also requires a pre-qualification process to join, and each new user goes through a personal onboarding session with someone from the company.

“The untold truth about most consumerish companies is that growth happens through word of mouth.” — Rahul Vohra

“The perceived status of being accepted as an early user of Superhuman has helped Superhuman’s acquisition and conversion,” wrote Kevin Kwok, a former venture capital investor. “Users don’t share Superhuman because they need others to use it for it to work; they share it because they want to.”

Superhuman also accelerated the buzz through simple-but-effective design features built into the product itself: At the bottom of every email, there’s a link that says, “sent via Superhuman,” which takes you to a landing page when you click on it. And by using a shortcut keystroke, users can quickly generate a referral email with a link to send their friends.

“It was all word of mouth. It was all referral,” Rahul Vohra, CEO of Superhuman, said of his company’s quick early growth in an interview with Mixergy. “The untold truth about most consumerish companies is that growth happens through word of mouth.”

 

Potbelly Sandwich Shop’s Taste of Home Campaign

Potbelly Sandwich Shop, a Chicago-founded restaurant chain, has a strong presence in the Midwest. But because other parts of the country are less familiar with the brand, the company uses word-of-mouth marketing to generate awareness when it expands into new regions.

When Potbelly opened its first stores in Austin, Texas, the company got hold of a mailing list of people who had moved to Austin from Chicago. Potbelly sent each of them a hand-signed letter in the mail, inviting them to introduce their friends to a “taste of home.” Each letter included tickets for 10 free sandwiches.

By doing this, Sernovitz wrote in Word of Mouth Marketing, “You turn a customer into a talker — a talker who you’ve helped look cool for buying lunch for the whole crew.”

He continued: “Those 10 tickets are a multiplier, something that turns a single word-of-mouth recommendation into many recommendations.”  

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